Intel: JMP Cuts to Hold on Rumored ‘Haswell’ Power Circuitry Issues

By Tiernan Ray

Shares of Intel (INTC) are down 40 cents, or 1.8%, at $21.43, following weaker-than-usual chip sales data from the Semiconductor Industry Association over the weekend, and a downgrade to Market Perform from Market Outperform this morning by JMP Securities’s Alex Gauna.

Gauna cut his estimates for this year’s profit per share to $1.85 from $2.15, and cut next year’s estimate to $1.70 from $2.25, warning of what he thinks might be a delay in Intel’s “Haswell” processors for PCs and servers this year and next.

Gauna says third parties he spoke to at a tech conference express the view Intel is experiencing some delays with Haswell, the latest “micro architecture” change to the company’s microprocessors, which was excepted to bring extra power savings, initially for PCs:

The Intel effort to integrate a voltage regulation (VR) stage into the Haswell architecture appears to have fallen short of desired results, and the company is consequently reversing course and not pursuing this power management scheme with subsequent products. Our discovery of this issue came from discussions with multiple power management partners at the APEC (Applied Power Electronics Conference) trade show that was held March 17-21, 2013, and we were also informed that they had only just become aware of Intel’s change of direction in prior weeks. To be clear, the industry sources we spoke with indicated Haswell is working, but that “the new power approach did not live up to expectations.” It was the consensus view that timelines were also slipping, both for the Haswell refresh for PCs in 2H13 and likely down the road for the next two-socket Xeon server move to Haswell that is known as Grantley and expected in 2H14 […] Sources declined to elaborate on (or didn‟t know) the exact performance implications; however, integrated VR was touted as a key feature that will afford the Haswell platform improved power efficiency without compromising performance. We also know from speaking with senior Intel engineers that integrated VR had been “an area of great debate internally.” It seems evident at this juncture that this debate was won by integration proponents, but then lost in terms of benefit yield.

Writes Gauna, “If the new VR approach does not work as expected, it calls into question Intel and its partners’ ability to field a next generation of Ultrabooks, convertibles and tablets with appealing enough form factors and battery life to staunch the tide of ARM-based tablets.”

Gauna also notes any Haswell power issues could reduce one of the purported benefits to Intel’s server shipments as well:

It was the consensus view that timelines were also slipping, both for the Haswell refresh for PCs in 2H13 and likely down the road for the next two-socket Xeon server move to Haswell that is known as Grantley and expected in 2H14.

These concerns, he notes, come amidst a backdrop of Intel not having made gains in mobile computing, which is where computing demand is shifting:

The unfortunate thing for Intel is that overall computing demand appears generally healthy. The demand, however, is heavily skewed toward tablets and smartphones where Intel has yet to establish a material presence. Intel has been able to make only modest progress in smartphones and tablets to date, and there was no evidence out of the 2013 CES or Mobile World Congress trade shows to suggest this is likely to change this year.

The end results, he thinks, is,

We expect 2014 gross margins to be weighed upon by under-absorbed capital spending expenses, and operating margins to be impacted by ongoing levels of elevated spending as Intel continues to pound away on its mobile initiatives in smartphones and tablets.

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APRIL 1, 2013 11:31 A.M.

The floating Gate wrote:

I don't see how this conference can even come close .power electronics? A hoax
About the 2013 Conference

As The Premier Event in Applied Power Electronics™, APEC focuses on the practical and applied aspects of the power electronics business. This is not just a designer's conference, APEC has something of interest for anyone involved in power electronics:

Equipment OEMs that use power supplies and dc-dc converters in their equipment
Designers of power supplies, dc-dc converters, motor drives, uninterruptable power supplies, inverters and any other power electronic circuits, equipments and systems
Manufacturers and suppliers of components and assemblies used in power electronics
Manufacturing, quality and test engineers involved with power electronics equipment
Marketing, sales and anyone involved in the business of power electronics
Compliance engineers testing and qualifying power electronics equipment or equipment that uses power electronics

Are you a member of the press or a financial analyst covering the power electronics industry? APEC 2013 will again be offering its complimentary full registration. Start making your plans now to join us in Long Beach, CA March 17-21, 2013 for an incredible program.

APRIL 1, 2013 11:44 A.M.

Cube Monkey wrote:

Hmmm... Isn't JMP an Intel Bear normally? Just curious - if this rumor is BS or intentionall misleading, what happens to JMP? Wouldn't this be manipulation? Funny that this announcement is made on April Fool's Day.

APRIL 1, 2013 3:20 P.M.

The Analyst is a liar wrote:

Intel has come out and rebuffed the baseless claim from JMP. Intel said that the "Haswell has no problem and will be on track". Why should anyone learn to this liar?

APRIL 1, 2013 9:45 P.M.

Wouldn’t this be manipulation? wrote:

Of course it is and I would bet the JMP made some money shorting INTC today.

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.